Designing a Solution to a “Wicked” Problem

Within the management literature, many authors propose that a solution is a response to a customer problem (Stremersch, Wuyts, & Frambach, 2001), or it solves a customer’s problem even before the customer has considered its own products and service requirements (Davies et al., 2007). This view is in line with the dictionary definition of a “solution, which is something that is used or done to deal with and end a problem or something that solves a problem, or the act of solving something” (“Merrial-Webster Dictionary on-line,” 2017)

For such problem-solving purposes, design thinking can offer capable tools (Buchanan, 1992). The value of design thinking is evident here, especially where the problems in a customer’s business environment are ill-formulated, and conflicting values make the organizing of a solution much more compli- cated. Buchanan (1992) explained the kind of design that is capable of dealing “wicked problems” (Rittel & Webber, 1973) for which there is no particular solution and where different parties have their own motivations for defining the nature of the problem (Kimbell, 2011). Designers will explore a wide range of connections and actions in everyday practice and investigate how different types of connections will affect the structure of a solution (Buchanan, 2001), making it a reflective practice wherein professionals move between different framings for problems as they go about resolving them (Schön, 1983).

The key element that makes design thinking applicable in the solution sales situation is that in design thinking a solution does not arise from the exist- ing markets; instead, the actual act of designing seeks to identify new markets and economic value (that does not yet exist, e.g., Romme, 2003). Therefore,

according to Luotola et al., (2017) design is seen to support what the concept of value-based selling aims to accomplish (Storbacka et al., 2016; Töytäri & Rajala, 2015), namely, to achieve the goals of value-creation at the concrete actor level and then have an approach for solving the problems in that business situation for the customer.

Solutions are, however, usually complex, and they are often not even clear in terms of having identified the precise problem (Cross, 2006). Rittel and Webber (1973) compared the ambiguity associated with “wicked problems” to uncer- tainty, as issues are not always obvious and explicitly known at the beginning of a design situation. More specifically, the solution concept must go beyond an explicit customer need or problem (Adamson et al., 2012). This means that industrial sellers can add value to a customer with their offerings, expertise, technologies, and capabilities when they can show how the problems they solve add value as higher revenues, process optimization and/or optimised operat- ing expenditures. In this way, the requirements for the solution arise from the customer’s actual business situation (Adamson et al., 2012) and the need arises from the fact that the customer begins to see the supplier’s offering as a feasible solution that can generate greater economic value to their own business (Lu- otola et al., 2017).

This dissertation pays special attention to the wicked problem approach, which was originally formulated by Rittel and Webber during the 1960’s. It was used as an applied design method for solving managerial problems and later further developed by several design professionals. Rittel and Webber (1973) defined a wicked problem as

“…a class of social system problems which are ill-formulated, where the information is confusing, where there are many clients and decision makers with conflicting values, and where the ramifications in the who- le system are thoroughly confusing”

Rittel’s definition (1973) is very applicable to identifying “wicked problems” in a sales situation as a process of reflecting and acting on problematics that can place managers in a situation where they must deal with complexity, while they still lack the relevant tools for such problem-solving. This view is supported by several scholars who argue that if these problems are complex, ill-defined, or wicked, and are not identified at the beginning of the sales situation, then deductive limited views become inadequate (Amabile, 1983). Dorst (2007) fur-

ther divided these problems into three different categories: Determined, un- derdetermined, and undetermined (see Table 3).

When dealing with undetermined problems i.e., “wild cards” that are sur- prising and may even happen unexpectedly (Steinmüller, 2003), the seller of- ten does not have the needed tools and capabilities to solve such complexities based on previous experience. The effect of a wild card can also be tremendous, since it does not fit the usual frame of reference and thus undermines the usual concept of the ordinary, normal way of doing things and makes the concepts we already know even more doubtful (Steinmüller, 2003).

Table 3. Problem categories (Dorst, 2007) and definitions (Dorst, 2007), and a concrete prob- lem situation in the value-based sales process.

PROBLEM

CATEGORY DETERMINED UNDERDETERMINED UNDETERMINED

DEFINITION OF

PROBLEM Problems are known facts, business goals, and key challenges within business processes.

These problems cannot be determined at the begin- ning. The interpretation of a problem is thus ill-de- fined, and the possible solution to the problem can only be decided dur- ing the design process.

The problems are unex- pected, i.e., wild cards (Petersen, 2000) that are ill-formulated, so informa- tion is confusing, and the business process involves several clients and deci- sion- makers that have conflicting value drivers. NEEDED

SELLING CAPABILITY

As the problem becomes explicit, the parties have the needed tools and ca- pabilities to solve them.

This “wickedness” of a problem requires a more iterative, less identifia- ble problem- solving ap- proach and greater design capabilities.

The seller should be able to handle the uncertainty of an unexpected business situation. The seller who is solving the “wicked” prob- lem targets the process based on his or her own capabilities, abilities, and creativity. The seller needs to adapt to the role as a value designer. A CONCRETE PROBLEM SITUATION IN THE VALUE- BASED SALES PROCESS An energy company knows that shipping goods to a construction site can be challenging. However, both the seller and the customer are cer- tain that such problems can be solved using the suppliers’ skills and previ- ous experience.

The marine customer does not believe the productiv- ity impact of the solution and is hesitant to share needed business informa- tion. Finding the solution to this problem requires commitment to continu- ous co-creation and infor- mation sharing before the parties can reach a point of certainty.

In a marine sales case, the establishment of a new shipping alliance between ship owners and ship op- erators produced an unex- pected and undetermined problem. The parties have no previous knowledge of how to create a con- tract model for fair value sharing. The seller and the customer need to make several iterations of the calculations for full eco- nomic benefit before the parties can reach certainty.

Therefore, the seller’s capability to reach out and solve unexpected events indeed does require the ability to act as a value designer. Such sellers have an important role to play in leading the design process and dealing with both the underdetermined and undetermined problems (Dorst, 2007). These sellers by using their insights and gathered facts can impact the customer’s ways of mea- suring and seeing the business benefits (Adamson et al., 2012). In other words, value designers are not afraid to push customers away from their comfort zones in order to encourage greater reflection. Moreover, any uncertainty is not seen in a negative light; rather, it is seen as a source of competitive advantage, if only managed accordingly (Perminova et al., 2008).

Although the interface of solution business is complex and uncertain, it will increase the chances of economic benefit if both parties agree to the collabora- tion. This “wickedness” of a problem, means that the cause of any uncertainty can be unknown and thus requires an iterative, less identifiable problem-solv- ing approach (Amabile, 1983). Design provides a framework for making sense of complexity, wherein several clients and decision makers have conflicting val- ues and wherein the ramifications of the whole system are thoroughly confus- ing. While reflecting on and making sense of the situation during the process of co-designing, the actors start to see both the situation and the process from a different perspective. What was considered uncertain earlier may indeed be- come a fact or even an opportunity. Thus, designing value is not about uncer- tainty reduction. It is about uncertainty management in the sense that the point of certainty/uncertainty is moved clearly into the actor network.

2.4.3. Abductive Epistemology for Value Co-creation

In industrial solutions and value-based selling, the seller’s focus is on the ben- efits the supplier’s offering will provide to the customer (Liinamaa et al., 2016). Using this focus, suppliers strive to create a better return on value for the cus- tomer by providing more comprehensive offerings that go beyond the tradi- tional goods and product offerings (Ulaga & Reinartz, 2011). At the same time, the customer’s buying functions have generally become more value-focused (Agndal, Axelsson & Lindberg, 2007). Yet it is also acknowledged that custom- ers tend to have a different perception of value than suppliers do (Lefaix-Du- rand & Kozak, 2010). Tuli et al. (2007) acknowledged this disparity between the perceptions of both parties and suggested that suppliers do not understand

to the necessary degree the precise business environments and unique require- ments of their customers.

Several authors provide (value) co-creation as a means of finding a solution to a customer problem (Ramírez, 1999; Vargo & Lusch, 2004). In the ideal sit- uation, co-creation contributes to a mutual belief in the value proposition of a solution. Value functions are not identified and created only by the seller; they are co-created by the seller and the customer and realized during the custom- er’s value generating processes (Grönroos, 2008). To date, scholars have argued that in co-creating there is a greater chance to go beyond the explicit problems and focus on solving those problems that are ill-defined. However, such prob- lems often address complex issues, and thus, they cannot be easily described in a concise or complete manner.

A majority of the studies that have explored value co-creation have focused on companies’ providing physical goods or services (Cannon & Homburg, 2001; Ulaga & Eggert, 2006; Ulaga & Reinartz, 2011). Only a few studies have discussed value co-creation in the solution business (Hakanen, 2014; Pekkar- inen, 2013; Storbacka et al., 2016) or in value-based selling.

In value-based selling where customers expect the best available total solu- tion and long term benefits for their organization (Töytäri & Rajala, 2015) the seller organization faces increased pressure to impact the customer’s profitabil- ity. This goal means that increased focus on customer value-creation is seen as driving industrial sellers away from being not just customer-focused, but in- stead toward providing comprehensive offerings through total customer value management (Keeney, 1992).

However, several challenges have been observed that can prevent the suc- cessful implementation of value co-creation strategies in value-based selling. In the current thesis, the different co-creation modes for value-based selling and their features are compared. Table 4 provides an overview of these approaches. As mentioned earlier, the current epistemology behind value co-creation during sales is either based on a deductive view, typically known as “push sales” that departs from a supplier's own product and service portfolio. Another com- mon approach is based on an inductive view, known as “pull sales” that departs from the customer’s spelled out request and existing needs (Davies, Brady, & Hobday, 2007; Tuli et al., 2007). The term “push” stems from the idea that sell- ers are attempting to promote and push their products and services at custom- ers. This view is in line with the original conceptualizations of solutions that

address the supplier’s intention to identify its customer’s business problems and then provide a solution that is constituted from a combination of goods and services (Davies et al., 2006; Miller, Hope, Eisenstat, Foote, & Galbraith, 2002).

Table 4. Characterizations of the three different sales epistemologies. SALES

EPISTEMOLOGY DEDUCTIVE (push-sales) INDUCTIVE(pull-sales) ABDUCTIVE(value-based sales)

TYPE OF OFFERING Product and service portfolios offered by the seller (Biggemann et al., 2013).

Bundles of products and services that ad- dress a customer need (Davies et al., 2007; Tuli et al., 2007).

Customer problem is reflected against sell- ers’ offering portfolios and capabilities. PROBLEM TYPE Customer problem is

assumed by the seller that believes their offering can solve a customer problem. (Davies et al., 2006; Miller et al., 2002)

Customer believes the seller’s offering solves their problem. (Tuli et al., 2007; Töllner et al., 2011; Windahl & Lake- mond, 2006)

Neither the supplier nor the customer can formulate the problem at the beginning. Prob- lem is both wicked and ill-defined (Rittel & Webber, 1973) FOCUS OF

VALUE-CREATION Seller’s focus is on a customer’s value to a firm’s profit. Value-cre- ation for a customer is often ignored (Blatt- berg & Deighton, 1996; Clerand & Bruno, 1997)

Customers expect that sellers are capable of demonstrating how their solutions con- stitute a response to their problem and en- sure value capture for their business (Tuli et al., 2007; Töllner et al., 2011; Windahl & Lake- mond, 2006)

Seller’s focus is on the value creation given to a customer (Vargo & Lusch, 2004), as well as capturing a fair share of the value that is creat- ed (Hinterhuber & Ber- tini, 2011)

APPROACH USED FOR DESIGNING A SOLUTION TO A PROBLEM

The seller organization formulates the needed solution based on its understanding and capabilities.

The customer for- mulates the solution based on the capa- bilities it believes are available from the seller.

Solution is co-created by the seller organiza- tion and the customer (Grönroos, 2008). The customer’s problems are reflected in terms of the seller’s offering portfolios and the sell- er’s capabilities. EXAMPLES OF THE

THREE DIFFERENT SALES STRATEGIES

This situation is common for those manufacturing com- panies that typically have counted on high engineering skills to provide the best possi- ble machinery for their customers.

This is a typical situa- tion for procurement processes that are based on tendering engineer-to-order sup- ply chains of large and complex capital goods wherein the purchas- ing organization un- dertakes the procuring of goods and services from suitable suppliers.

The situation is typical of value-based solution seller organizations that integrate com- plex sales settings with many stakeholders in both the supplier and the customer’s busi- ness environment.

The deductive push sales strategy has its origins in the goods-dominant logic, as it concentrates on manufacturing and distribution activities and considers value to be created by the company and consumed by its customers (Vargo & Lusch, 2004). The business performance focuses on the value captured by a seller organization (Adner & Zemsky, 2006; Bowman & Ambrosini, 2000) and often ignores value-creation for the customer (Blattberg & Deighton, 1996; Clerand & Bruno, 1997). This situation is common for those manufacturing companies that typically have counted on high engineering skills to provide the best possible machinery for their customers.

Inductive pull sales, on the other hand, takes the opposite approach, as it emphasizes a process-centric view of solutions that focuses on the customer relationship in order to understand the customers’ needs and problems (Tuli et al., 2007; Töllner et al., 2011; Windahl & Lakemond, 2006). In that strategy, sales departs from a customer’s spelled out request, and the role of a salesper- son then is to ask questions to get the customer to reveal the needs and prob- lems they have and the outcomes they desire (Hunter, 2016). In “pull” sales, the customer strives to find a suitable business offering when they have a business problem or need the products and services a specific supplier offer. Ideally, the customer comes to believe the offerings company have are the ones they have to buy as they believe it solves their business problems. Moreover, when the customer believes this as well, price becomes less of an issue (Hunter, 2016).

The inductive view originates from the service-dominant logic (Vargo & Lusch, 2004) and suggests that business performance should focus on the val- ue creation delivered to a customer. In this view, customer value is a subjective perception determined by the customer (Cantù et al., 2012; Zeithaml, 1988) and evaluated relative to the competitive offerings (Ulaga & Reinartz, 2011; Windahl, Andersson, Berggren, & Nehler, 2004). This strategy is typical for procurement processes that are based on tendering engineer-to-order supply chains of large and complex capital goods wherein the purchasing organiza- tion undertakes the procurement of goods and services from suitable suppli- ers.

Value-based-selling indeed contains elements of an inductive pull sales ap- proach, as it departs from only understanding the customer’s business situation (Terho et al., 2012) and instead emphasizes the development of attractive value propositions (Terho et al., 2012; Töytäri & Rajala, 2015); yet, “skilled selling” involves an in-depth understanding of the customer and its markets and op-

erations (Haas et al., 2012 p. 102). Value-based selling behaviour can thus be defined as:

“…the degree to which the salesperson works with the customer to craft a market offering in such a way that benefits are translated into mo- netary terms, based on an in-depth understanding of the customer’s business model, thereby convincingly demonstrating their contribution to customers’ profitability” (Terho et al., 2012, p. 178).

When the problem and the solution are evident to both parties, then the de- ductive and inductive approaches serve their purpose by enabling the best cost- based offering, which is why there is no need for a value-based sales approach. However, these situations are not addressed in this current thesis. The focus of this research is on the effort to integrate complex sales settings with the many stakeholders within both the supplier and the customer’s business environ- ments. Thus, each sales case consists of a group of stakeholders that have novel types of problems and economical motives – thereby creating an uncertainty that sets forth the necessity to use value-based selling.

According to Martin (2009) the model for value-creation in business re- quires having a balance between two philosophies. One is analytical thinking that harnesses two forms of logic – deductive reasoning and inductive reason- ing. The goal of this model is mastery through rigorous, continuously repeat- able analytical processes and analyses. The opposing school of thought is intu- itive thinking, which is centered on creativity and innovation. This viewpoint highlights the notion that too much analysis drives out innovation, and offer- ings should spring from the capabilities of a designer. The proponents of this thinking are creative instinct and unanalyzed insight, referred to as the “art of knowing without reasoning” (Martin, 2009, pp. 6)

However, Martin (2009) also believes that neither analytical or intuitive thinking alone is enough to ensure optimal business performance. Instead, the successful business will balance analytical mastery and intuitive originality in a dynamic interplay called design thinking; at the heart of that design thinking is abductive logic. The concept originated with Charles Sanders Peirce (1934) who believed that it is not possible to prove any new thought, concept, or idea in advance: all new ideas can be validated only through the unfolding of future events. Thus design thinking enables the organization to balance analytical and intuitive thinking.

In value-based selling, abductive approach takes as its starting point the fact that neither party has the necessary certainty and understanding of the re- quired solution at the beginning of the sales situation. This scenario means that value functions are identified, and the solution is co-created between the seller organization and the customer (Grönroos, 2008). The approach originates in